Keston & Anor v Inland Revenue

A conveyance from a vendor directly to a subpurchaser may, in principle, attract stamp duty by reference to consideration under both the original sale and the subsale, because it gives effect to both agreements. The subsale relief in section 58(4) of the Stamp Act 1891 is therefore an exception to that double liability. Where the consideration is payable periodically, section 56(2) limits the consideration brought into account to the total payable during the prescribed 20-year period. By section 58(7), that limited amount is the relevant chargeable consideration for applying section 58(4). If it is less than the property's value immediately before the subsale, the relief is unavailable and duty is chargeable on the full consideration under the original sale.

The appellants appealed by way of case stated against the Commissioners of Inland Revenue's adjudication under section 12 of the Stamp Act 1891. A vendor transferred property directly to the appellants at the request of the intermediate purchaser, Kinrush Limited. The original sale was for £1.3 million, while the subsale consideration was payable partly by a £500 deposit and 23 annual £500 instalments, followed by a final balance with interest.

The Commissioners assessed stamp duty at £52,400. The central issues were whether the transfer was chargeable by reference to both agreements and whether section 58(4) relief applied when section 56(2) limited the consideration brought into account.

1. Appeal dismissed. The transfer was chargeable to stamp duty in the amount of £52,400.
2. The Stamp Act 1891 imposes duty on instruments rather than transactions. Under section 4(a), an instrument containing or relating to several distinct matters is separately chargeable in respect of each matter. The transfer implemented both the sale agreement and the subsale agreement. It was therefore, in principle, chargeable by reference to consideration moving under both agreements.
3. Section 58(4) provides relief for a subsale by charging the conveyance to the subpurchaser only in respect of consideration moving from the subpurchaser, subject to the statutory exception where that chargeable consideration is less than the property's value immediately before the contract of sale to the subpurchaser. The provision operates as relief from the otherwise applicable double liability.
4. Section 56(2) required the consideration under the sale agreement to be measured by the total instalments payable during the 20 years following the instrument's date, namely £10,000. Section 58(7) defines the chargeable consideration for section 58(4) by reference to the consideration brought into account in determining duty on the transfer. The relevant amount was therefore £10,000, not the property's full £1.3 million consideration.
5. Because £10,000 was less than the property's value immediately before the subsale, the exception in section 58(4)(a) applied and the relief was unavailable. The transfer was consequently chargeable on the full consideration under the sale agreement, in addition to the duty calculated on the subsale instalments.

The judgment describes an appeal by way of case stated from the Commissioners of Inland Revenue's adjudication under section 12 of the Stamp Act 1891. The Commissioners stated the case on 2 September 2003. The High Court dismissed the appeal.